Disrupting Antitrust: 10 Things To Know About Amazon Critic Lina Khan

Written by Dana Sanchez

Lina Khan, a 29-year-old law researcher opposed to Amazon’s seeming immunity from antitrust regulations, is credited with reframing decades of monopoly law in a single scholarly article.

Khan argues that low prices shouldn’t make the tech giant immune to antitrust legislation.

Online retailer Amazon is out for domination, employing more than 500,000 people and powering much of the internet itself through its own cloud computing division. Last week, Amazon briefly became the second company to be worth a trillion dollars.

Amazon users love the cheap prices, fast delivery, and movie-streaming service. Cities all over the U.S. have offered taxpayer money as incentives for the chance become home to a second Amazon HQ2.

But Amazon is blamed for the Retail Apocalypse, which has forced whole chains and thousands of mall-based stores to shut their doors, Market Watch reported.

In the 1970s, antitrust regulation was redefined to encourage low prices on items. Because Amazon is known for low prices, the business seemed safe from federal intervention, NYTimes reported.

Predatory pricing is key in determining monopolistic behavior, according to Herbert Hovenkamp, author of 21 volumes of antitrust law.

Amazon stock price is shown on an electronic screen at the Nasdaq MarketSite, Tuesday, Sept. 4, 2018, in New York. Amazon became the second publicly traded company to be worth $1 trillion, hot on the heels of Apple. (AP Photo/Mark Lennihan)

 

“Just being very big is not an antitrust violation,” Hovenkamp said in an interview with Market Watch. “As long as firms are acting on their own (and) they’re not conspiring with others, there hasn’t been a great deal of room for antitrust intervention.

“Low prices benefit consumers, but they frequently harm competitors. U.S. antitrust law has been pretty focused on what we call consumer welfare, which means that the dominant thrust of antitrust policy is toward low prices.”

Hovenkamp teaches at the University of Pennsylvania Law School and the Wharton School. He wrote “Antitrust Law: An Analysis of Antitrust Principles and Their Application.”

“Few of Amazon’s customers, it is safe to say, spend much time thinking they need to be protected from it,” wrote David Streitfeld in the New York Times.

Lina Khan is watching. She argues that low prices shouldn’t make the tech giant immune to antitrust legislation.

Big tech companies Facebook and Twitter are under increased scrutiny as calls increase for regulation. Executives have been answering questions by D.C. lawmakers about foreign influence, user privacy, hate speech and the integrity of their business models. Is Amazon next?

These are 10 things to know about Lina Khan and her antitrust fight against Amazon:

1. She’s watching Amazon

Lina Khan researches antitrust law and competition policy. A legal fellow at the Federal Trade Commission, Kahan works in the office of Commissioner Rohit Chopra. Previously, she served as director of legal policy at the Open Markets Institute, a team of journalists, researchers, lawyers, and advocates working to expose and reverse the stranglehold that corporate monopolies have on the U.S.

2. In the world of legal treatises, she’s a rockstar

In early 2017, then-unknown law student Khan published an article entitled “Amazon’s Antitrust Paradox” in the Yale Law Journal. The 93-page article got 146,255 views — that’s like a best-seller in the world of legal treatises, SludgeFeed reported.

3. She’s got the backs of ‘smaller’ retailers

In her famous-in-antitrust-circles article, Khan argued that monopoly regulators who focus on consumer prices are thinking too short-term. “In her view, a company like Amazon that competes against others selling things — and owns the platform where the deals are done — has an advantage that undermines fair competition,” NYTimes reported.

4. Her views in a nutshell

Khan says Amazon should not be allowed to get away with anticompetitive behavior just because customers love its prices. Once-strong monopoly laws have been marginalized, she wrote, and Amazon is “amassing structural power that lets it exert increasing control over many parts of the economy,” NYTimes wrote:

Amazon has so much data on so many customers, it is so willing to forgo profits, it is so aggressive and has so many advantages from its shipping and warehouse infrastructure that it exerts an influence much broader than its market share. It resembles the all-powerful railroads of the Progressive Era, Ms. Khan wrote: “The thousands of retailers and independent businesses that must ride Amazon’s rails to reach market are increasingly dependent on their biggest competitor.”

5. Even her critic’s can’t knock the article too hard

Konstantin Medvedovsky, a New York antitrust lawyer, tweeted about Khan’s article, calling it “Antitrust Hipsterism.” Medvedovsky wrote, “Everything old is cool again” and described Khan’s article “the face of this movement.”

“Unwilling or perhaps unable to accept that a woman wrote a breakthrough legal text, they keep talking about bearded dudes,” Streitfeld wrote.

6. Her admirers liken her to one of the greatest legal minds in U.S. history

Admirers of Khan and her fellow reformers have sometimes called them the New Brandeis School or the New Brandeisians, after Louis Brandeis, a Progressive-Era opponent of big business. According to legal scholars, Brandeis’ opinions were some of the “greatest defenses” of freedom of speech and the right to privacy ever written by a member of the Supreme Court.

7. Amazon funded a rebuttal to Khan’s article

Timothy Muris and Jonathan Nuechterlein, who previously worked at the Federal Trade Commission, published a response to Khan’s argument. They described Amazon as a brilliant innovator whose breakthroughs have helped “launch new waves of innovation across retail and technology sectors, to the great benefit of consumers.” Their rebuttal, entitled “Antitrust in the Internet Era,” was funded by Amazon, SludgeFeed reported.

8. Khan is an immigrant

She was born in London to Pakistani parents who emigrated to the U.S. when she was 11. She is married to a Texas doctor “who uses his Amazon Prime account all the time,” NYTimes reported. She secured a clerkship in Los Angeles with Stephen Reinhardt, a liberal icon and Ninth Circuit Court of Appeals judge who died in March. Instead, she told the NYTimes she would be starting a fellowship at Columbia in the fall.

9. She advocates for a ‘new vocabulary’ to assess the dominance of tech companies

“As consumers, as users, we love these tech companies,” Khan said. “But as citizens, as workers, and as entrepreneurs, we recognize that their power is troubling. We need a new framework, a new vocabulary for how to assess and address their dominance.”

10. She’s was an advisor for upcoming hearings on antitrust

In July, the Federal Trade Commission asked Khan to be a temporary adviser in advance of  antitrust hearings scheduled for Sept. 13 and Sept. 14 at Georgetown University Law Center. These are the first hearings of their type since 1995, and they’ll focus on whether a changing economy requires changing enforcement attitudes. Two panels will debate whether antitrust should keep its narrow focus or, as Khan urges, expand its range, NYTimes reported.

“Ideas and assumptions that it was heretical to question are now openly being contested,” Khan said. “We’re finally beginning to examine how antitrust laws, which were rooted in deep suspicion of concentrated private power, now often promote it.”

 

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About Dana Sanchez
Dana Sanchez was born in South Africa and is a U.S. citizen. After working in advertising, she went back to school and earned a master's degree in journalism from the University of South Florida. As a business writer, she won regional and national writing awards. As editor of a daily newspaper, she coordinated staff writers, freelancers and photographers in the fast-paced environment of daily news. Dana was an editor at Moguldom Media Group for four years, helping to build and manage a team of staff and freelance writers. She works now on Moguldom.com for Nubail Ventures. A long-distance hiker and cyclist, she writes about the business of technology.